Portugal is internationally known in the music scene for its traditions of fado, a popular form of music that has undergone numerous mutations in the last half of the 20th century. Within Portugal, regional folk music remains popular, having been updated and modernised in many cases, especially the northeastern region of Trás-os-Montes.

A crucial concept in Portuguese music is saudade, which can be most closely translated as yearning, but has a more expansive meaning. Saudade is said to be requisite for musicians, as it powers their performances and causes frenzied crowd reactions.

Fado
Fado (fate in Portuguese) arose in Lisbon as the music of the urban poor, and is thus often compared to rembétika music of Greece. Fado songs are typically lyrically harsh, with the singer resigned to sadness, poverty and loneliness, but remain dignified and firmly controlled.

Fado is said to have been born in the beginning of the 19th century, when immigrants from Brazil were commonplace, and their music was the fofa and lundum dances. These were often crude and vilified by the upper-class at the time, but soon became the basis for fado. Portuguese literature, especially the quatrain couplets and modhina ballads, were another integral part of early fado, but fado had appeared by 1836, when Maria Severa sang a fado so beautifully that she seduced and ruined the Comte de Vimisio. References to what may have been fado appear in Brazil in 1829, while modern fado is known since at least 1910, when it was first recorded.

Late in the 19th century, the city of Coimbra developed a distinctive fado scene. Coimbra, a literary capital for the country, is now known for being more refined and majestic. The sound has been described as "the song of whose who retain and cherish their illusions, not of those who have irretrievably lost them" by Rodney Gallop in 1936. A related form are the guitarradas of the 1920s and 30s, best known for Dr. Antonio Menano and a group of virtuoso musicians he formed, including Artur Paredes and José Joãoquim Cavalheiro. Student fado, performed by students at Coimbra University, have maintained a tradition since it was pioneered in the 1890s by Augusto Hilario.

Starting in 1939 with the career of Amália Rodrigues, fado was an internationally popular genre. A singer and film actor, Rodrigues made numerous stylistic innovations that have made her probably the most influential fadista of all time.

A rival in terms of influence is José Afonso, who began performing in the 1950s; he was a popular roots-based musician that led the Portuguese roots revival. With artists like Sérgio Godinho and Luís Cília, Afonso helped form nova canção music, which, after the 1974 revolution, gained socially-aware lyrics and became canto livre. The biggest name in canto livre was Brigada Victor Jara, a group that seriously studied and were influenced by Portuguese regional music.

Regional folk music
In Trás-os-Montes, traditional bagpipes (gaita-de-foles), a cappella vocals and a unique musical scale with equal semitones have kept alive a vital tradition. Some of the songs from this region are in the archaic language of Mirandés. Baixo Alentejo, in the south of Portugal, is a region known for its extant polyphonic singing groups, comparable to those found on Sardinia and Corsica.